In Business Model, Internet Access, Mobile, Spectrum

As with all business decisions made by telecom firms,  5G strategies are shaped by the realm of possibility and practical evaluations of revenue and profit potential. Sprint has lots of 2.5-GHz spectrum and is capital challenged.  So it comes as no surprise Sprint says it will lean on its 2.5-GHz spectrum, rather than millimeter wave spectrum. T-Mobile US has lots of new 600-MHz spectrum, so it is no surprise that T-Mobile US now says it will rely on its 600-MHz assets to launch 5G. Verizon has lots of 28-GHz spectrum; AT&T has significant 24-GHz assets. So it should come as no surprise those bands are talked about when 5G is discussed by each of the firms. 

Verizon, with a small fixed network footprint, plans to use 5G fixed wireless to take market share away from other contestants out of region. AT&T, with the biggest fixed network footprint, will not find that so attractive, and also will be building its 700-MHz first responder network and (it hopes) recasting its revenue streams by adding Time Warner assets.

Licensing rules for 3.5-GHz Citizens Broadband Radio Service are no exception. Larger mobile service providers favor licenses covering areas larger than census tracts but no larger than counties. Small providers want smaller allotments.

In each case, the policy preferences reflect the capital investments each type of firm has to make, as well as scale of proposed operations and fit with existing operations. Firms with national operations face lower costs if larger licenses are issued. Firms with local operations face lower costs if licensing areas are smaller.

Other strategy considerations likewise reflect perceived strengths and weaknesses. For many retail service providers, sticking with 4G as long as possible will seem the wisest choice. For others, exhaustion of 4G revenue potential will make an early transition to 5G realistic.

But even the way 5G is introduced will hinge on the existing set of assets any competitor possesses. T-Mobile US has a trove of 600-MHz spectrum, well suited to coverage, so a “mobile 5G” approach makes sense.

For Verizon, with a smallish fixed network footprint, but ample millimeter wave spectrum assets, fixed 5G offers a chance to compete out of region, allowing Verizon to take market share from other competitors (residential fixed line services) where it previously could not attempt to do so.

For AT&T, with a relatively more substantial fixed network footprint than Verizon, and with other growth initiatives consuming capital, mobile operations might make more sense.

None of that is unusual. Every competitor tries to maximize the value of perceived assets and strengths and minimize the impact of perceived weaknesses. Verizon’s trove of 28-GHz and 39-GHz spectrum assets are best suited for small cell deployments (capacity, rather than coverage). Starry argues along similar lines that millimeter wave networks work well for fixed deployments.  

T-Mobile US 600-MHz assets are better suited for coverage, hence the mobile emphasis.

There’s nothing terribly unusual here. Every firm argues for policies that each believes best suits its own prospects and interests.

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